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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): October 19, 2000
MedQuist Inc.
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(Exact name of registrant as specified in its charter)
New Jersey 0-19941 22-2531298
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(State or other (Commission (I.R.S. Employer
jurisdiction File Identification No.)
of incorporation Number)
or organization)
Five Greentree Centre
Suite 311
Marlton, NJ 08053
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(address of principal executive offices) (Zip Code)
Registrants's telephone number, including area code: (856) 810-8000
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Item 9. Regulation FD Disclosure.
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The following is the script from the Registrant's third quarter 2000
investor conference call on October 19, 2000:
Medquist Inc. - 2000 Third Quarter Conference Call (October 19, 2000;
11:00 a.m.):
Good morning everyone. I would like to take this opportunity to thank
you for participating in our conference call. My name is David Cohen and I am
the Chairman and Chief Executive Officer of the Company. Also on the call today
are John Donohoe, our President and Chief Operating Officer, Brian Kearns, our
new Chief Financial Officer, John Suender our Senior Vice President and General
Counsel and Bruce Van Fossen, our Vice President - Finance and Controller.
I first would like to welcome Brian Kearns our new CFO. Many of you
know Brian and he will make a great addition to our team.
By now everyone should have received a copy of our earnings release or
have had the opportunity to review the information distributed by the wire
services.
As indicated in our press release, MedQuist generated solid results
during the third quarter of 2000, despite a tough market place, in which,
reimbursement pressure on hospitals continues to be intense. Despite this
difficult operating environment, MedQuist is an extremely strong company, with a
blue chip client base, high recurring revenue, and strong earnings and cash
flow. Management remains committed to the company's growth prospects, and is
enthusiastic about the opportunities facing MedQuist and Philips in medical
transcription and related businesses. I recently spoke to Gerard Kleisterlee,
the new COO of Royal Philips, and he assures me that Philips is very
enthusiastic to strongly enter the U.S. healthcare IT space.
MedQuist and Philips are now working aggressively on a number of
technology and business initiatives with the objective of accelerating
MedQuist's revenue growth and margin expansion. The two companies are close to
selecting a technology for MedQuist's digital internet-enabled transcription
platform. This platform will enable MedQuist to reduce its costs and improve its
service offering, which will support aggressive ongoing market penetration in
MedQuist's transcription business. The two companies are also moving
aggressively to develop a front-end speech recognition and back-end medical
editing workstation configuration that will enable MedQuist to expand its
transcription capacity and improve its cost competitiveness.
MedQuist and Philips are also working to leverage MedQuist's strong
business and customer base into closely related businesses and markets. These
businesses include document management, automated coding, data mining, release
of information and legal transcription, plus the domestic ambulatory physician
market and the overseas acute care market.
At this time I would like to turn it over to Brian Kearns for a review
of our financial results.
Thank you David and good morning everyone.
For the third quarter:
The Company generated revenue of $90.6 million and EBITDA of $19.8
million or 21.8% of revenue. Proforma net income was $9.2 million or $0.25 per
share on a diluted basis.
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At September 30, 2000 on a preliminary unaudited basis, the company had
$123 million in working capital including $81 million in cash. The Company had
approximately $400,000 of debt and shareholders equity was over $290 million.
At this time I will turn the presentation over to John Suender,
MedQuist's General Counsel.
This presentation and the question and answer session to follow contain
forward-looking statements within the meaning of the safe-harbor provisions of
the U.S. federal securities laws. These statements include, for example, market
estimates, growth and expansion plans and opportunities, potential revenue and
cost synergies, revenue and earnings projections, expected growth rates, and the
benefits of new technologies. Such forward-looking statements are subject to
risks and uncertainties that could cause actual results to differ materially
from those expressed in the forward looking statements.
Many of these risks and uncertainties relate to factors that are beyond
our ability to control or estimate with certainty. For example, we cannot
predict future market and economic conditions in general, the healthcare
industry specifically or the practices of our suppliers such as long distance
carriers. We also do not know how our competitors and other market participants
will act in the future. We also do not know and cannot predict the impact of new
services or products on the demand for our services. In general, there are,
among others, risks and uncertainties regarding our ability to: lower telecom
costs; achieve productivity gains; implement and achieve market acceptance of
new technology platforms, including speech processing technology; successfully
negotiate and finance new acquisitions; successfully integrate acquired
businesses and achieve anticipated synergies; recruit and retain qualified
transcriptionists and other employees; manage growth; and expand our client base
to other non-traditional healthcare clients and to non-medical clients such as
the legal industry.
These and other risk factors are detailed in MedQuist's reports filed
with the SEC, including its Form 10-K for the year ended December 31, 1999. This
script and these risk factors are being filed with the SEC in a Current Report
on Form 8-K. Readers are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of this time. MedQuist does not
undertake any obligation to publicly release any revisions to any
forward-looking statements to reflect events or circumstances occurring after
this conference call.
At this time we would like to open up the call to your questions.
Please announce your name before asking your question. Thank you.
Dated: October 19, 2000
Time: 11:00 a.m.
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The following financial detail was provided during the conference call:
MedQuist 09/30/00 Financial
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Overview
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<TABLE>
<CAPTION>
Q3-00 (1) Q3-99 9/30/00
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<S> <C> <C> <C>
Revenues $90,648 $86,001 Cash and Equivalents $80,943
Accounts Receivable - Net 75,103
Cost of Revenues 68,146 60,724 Other Current Assets 7,749
% of Revenues 75.18% 70.61% -----------
Total Current Assets 163,795
PP&E 34,354
Gross Profit 22,502 25,277 Intangible Assets 124,981
Gross Margin 24.82% 29.39% Other Long-Term Assets 8,317
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Total Assets 331,447
Selling, General & Administrative 2,719 2,851
% of Revenues 3.00% 3.32% Current Portion of Long-Term Debt 88
Accounts Payable 4,397
EBITDA 19,783 22,426 Accrued Expenses 35,751
% of Revenues 21.82% 26.08% -----------
Total Current Liabilities 40,236
Long Term Debt 393
Depreciation Expense 3,741 3,081 Other Long-Term Liabilities 727
% of Revenues 4.13% 3.58% Shareholders Equity 290,091
Amortization Expense 1,857 1,601 -----------
% of Revenues 2.05% 1.86% Total Liabilities and Equity $331,447
EBIT 14,185 17,744
% of Revenues 15.65% 20.63%
Interest (Income)/Expense (1,179) 0
Other (Income)/Expense 0 (718)
Pretax Income 15,364 18,462
% of Revenues 16.95% 21.47%
Tax Provision 6,146 7,476
% of Pretax 40.00% 40.49%
Net Income 9,218 10,986
% of Revenues 10.17% 12.77%
Earnings Per Share $0.247 $0.293
Shares Outstanding 37,369 37,441
</TABLE>
Notes:
(1) Excludes approximately $6,255 expense related to tender offer by Philips,
which is non-deductible for income tax purposes.
(2) Excludes approximately $600 of after-tax income related to the adjustment of
the restructure reserves established in 1997 and 1998.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
MEDQUIST INC.
Date: October 19, 2000 By: /s/ John M. Suender
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Name: John M. Suender
Title: Senior Vice President and
General Counsel
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